Electronic commerce is a method of doing business transactions at a distance and making payments electronically. The Internet, interactive networks and cable and ATM machines are being utilized for electronic commerce. The smart card containing a microchip with semiconductor memory or microprocessor and memory was invented about 18 years ago. During the past few years there have been efforts to store monetary value on such cards which have been called electronic wallets or electronic purses. One of the better known cash card systems is known as the Mondex card or Mondex electronic cash smart cards which is owned by a group of banks and credit card issuers. The Mondex card system and other electronic cash smart cards were promoted as being tamperproof. This attracted the interest of Bell Communications Research (Bellcore) and the Weizmann Institute and the Technion Institute which undertook research to break the microchip security codes. They were successful and reported their results in November 1996 that a valid electronic cash smart card with its security codes can be duplicated, that is, counterfeited. The problem facing the financial institutions was how they could proceed with their plans to build an electronic commerce industry through the Internet and other networks when a principal tool, the electronic cash smart card, was subject to counterfeiting. A very similar problem involves the sending of confidential and/or valuable electronic mail involving contracts, negotiations, agreements, legal analyses, attorney-client communications or communications with corporate officers, vendors or customers. Digital identity cards could be used to regulate or control the transfer or flow of this type of restricted data.
It is the object of the present invention to devise a method and apparatus to inhibit the counterfeiting of electronic cash smart cards and digital identity cards and to achieve enhanced security for electronic commerce and electronic mail.